On the surface, bailing out the Big Three of the auto industry sounds like a win-win scenario. Ford, General Motors, and Chrysler provide approximately 500,000 jobs to Americans and millions more to secondary and tertiary industries such as suppliers, dealerships, and mechanics. If the government does not bail them out, it could stand to lose over $150 billion in revenue. Obama’s proposed bailout package to the auto industry is only $25 billion, or 1/6th of the revenue they stand to lose. So why not bailout the auto industry? Why is President Bush resisting this seemingly mutually beneficial package?

I suppose I should qualify this article by saying I was never in favor of the bailout in the first place. Injecting $700 billion dollars worth of capital into banks is meaningless if it is putting the injector in debt an additional $700 billion dollars. What makes it worse is that the injector, the government, attached strings to its money, placing the businesses they want to succeed firmly under the governmental thumb.

But the bailout, er, rescue package passed, and we must deal with it. Obama’s plan calls for $25 billion of that $700 billion to go toward the auto industry. However, this money was not intended for the auto industry. This money was intended for banks, to encourage banks to lend money by way of buying up their troubled assets. Now the President-elect wants to bypass the original intent of the bill, one he voted for, and pursue some sort of “quick fix” for the auto industry. I fear there is not quick fix for our current economic situation. We can see retrospectively that it was a long time coming, and it will take time to fix it. One thing I haven’t heard politicians emphasize is fiscal responsibility or living within our means, something to which the government should adhere as well. The reason this is not emphasized is because it is not a quick fix, and Americans have grown so accustomed to instantaneous results. Our collective short attention span and disposable-goods society demand nothing less than instant and easily replaced goods and services, even at the expense of quality. Fiscal responsibility may not be a quick fix, but it is a quality fix that does not have a long-term perpetuation of our economic crisis.

Proponents (mostly democrats) for the bill cite the “rippling down” effect the $25 billion will create, helping the suppliers, dealers, mechanics, and ultimately the consumers. These proponents (Obama included) are the same people who decried trickle down economics, saying that its time had passed, that it doesn’t work in a 21st century economy (as if the laws of supply and demand are influenced by arbitrary temporal milestones). Now they insist that helping big business will be good for the consumer! I suppose a tax cut would have been just as effective, only the government wouldn’t go further into debt by imposing it…

Finally, if the Fed allows the automobile industry to participate in government handouts, whom can they prohibit from participating? Lobbyists for financing companies have already formed lines outside the Treasury Department seeking their own little capitally-infused piece of pie. What happens if we open it up to manufacturing and production companies? I presume it would be like a New Years Eve party in Times Square where Dick Clark offers free beer to anyone who shows up. The only difference would be that Dick Clark could not make the beer consumers play by his rules… The precedent is dangerous.

I don’t want the automobile industry to fail. I want them to succeed. It benefits me and my portfolio if they do. But if the government continues its practice of “rescuing” private companies, they will have created a maelstrom of debt from which it will be impossible to escape. Hundreds of thousands, even as many as 5 million may lose their jobs if GM, Ford, and Chrysler go under now; but how many more will lose their jobs five, ten, or twenty years from now if we continue to infuse false capital into a dying business who has been living outside its means?